Correlation Between ContextVision and Carasent ASA

Can any of the company-specific risk be diversified away by investing in both ContextVision and Carasent ASA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ContextVision and Carasent ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ContextVision AB and Carasent ASA, you can compare the effects of market volatilities on ContextVision and Carasent ASA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ContextVision with a short position of Carasent ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ContextVision and Carasent ASA.

Diversification Opportunities for ContextVision and Carasent ASA

-0.49

Correlation Coefficient

ContextVision  Carasent ASA

Very good diversification

The 3 months correlation between ContextVision and Carasent is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ContextVision AB and Carasent ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carasent ASA and ContextVision is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ContextVision AB are associated (or correlated) with Carasent ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carasent ASA has no effect on the direction of ContextVision i.e., ContextVision and Carasent ASA go up and down completely randomly.

Pair Corralation between ContextVision and Carasent ASA

Assuming the 90 days trading horizon ContextVision AB is expected to under-perform the Carasent ASA. In addition to that, ContextVision is 1.18 times more volatile than Carasent ASA. It trades about -0.05 of its total potential returns per unit of risk. Carasent ASA is currently generating about 0.1 per unit of volatility. If you would invest  1,815  in Carasent ASA on September 2, 2024 and sell it today you would earn a total of  245.00  from holding Carasent ASA or generate 13.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ContextVision AB  vs.  Carasent ASA

ContextVision AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ContextVision AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Carasent ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carasent ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Carasent ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ContextVision and Carasent ASA

The main advantage of trading using opposite ContextVision and Carasent ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ContextVision position performs unexpectedly, Carasent ASA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carasent ASA will offset losses from the drop in Carasent ASA's long position.

The idea behind ContextVision AB and Carasent ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.